Thomas Potter, III

Thomas Potter, III

Burr & Forman

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2nd Circuit Narrows Scope of Tippee Liability for Insider Trading

The US Second Circuit this Wednesday narrowed the scope of “tippee” liability for insider trading, rejecting the “doctrinal novelty” of recent government prosecution theories. In United State v. Newman, Nos. 13-1837-cr c/w...more

12/15/2014 - Dell Hedge Funds Illegal Tipping Insider Trading Material Nonpublic Information Nvidia Portfolio Managers Securities Securities Fraud US v Newman

SEC Sanctions 8 Auditors in “Broken Gate” Enforcement Sweep

The SEC this week issued cease-and-desist orders against eight auditors, fining them $140,000 collectively, for violating auditor independence rules by preparing the very broker-dealer financials they were to audit....more

12/11/2014 - Auditors Audits Broken Gates Broker-Dealer Financial Statements PCAOB Regulation S-X Sanctions SEC

Court Sets Aside SEC’s First Muni “Control-Person” Settlement

Earlier this month, the SEC used a “control-person” charge in a settled action against an elected municipal official in connection with municipal bond offering. Enforcement touted that “first” on the Monday after: “An...more

11/25/2014 - Dodd-Frank Enforcement Actions Municipal Bonds Municipalities Public Officials SEC

FINRA Solicitor Pay-to-Play Rules Complete IA & MSRB Suite

Last Friday, FINRA proposed pay-to-play prohibitions that parallel and implement similar Investment Adviser Act provisions in Rule 206(4)-5. That IA Rule prohibits investment advisers from paying third-parties to solicit...more

11/21/2014 - FINRA Government Entities Investment Advisers Act of 1940 MSRB Pay-To-Play Third-Party Relationships

Scalia & Thomas Look to Take on SEC’s Insider-Trading Theory

In an unusual three-page concurrence to a November 10 cert denial, Justice Scalia (joined by Justice Thomas) virtually called for a case that would subject the SEC’s insider-trading interpretations to scrutiny. Because courts...more

11/14/2014 - Chevron Deference Insider Trading SCOTUS SEC

SEC Ramps Up Municipal Enforcement

The SEC continues to ramp up its Enforcement efforts in the municipal-securities realm. The agency announced a series of settled actions on November 6....more

11/11/2014 - Broken Windows Joint and Several Liability Municipal Bonds Municipal Securities Issuers Municipalities Personal Liability SEC

Crackdown on Employer NDAs Without Whistleblower Protections

An October 27 letter from Rep. Maxine Waters and seven other House Democrats (from the Financial Services & Oversight Committee) asked the SEC to double down on scrutiny of employer confidentiality agreements that might...more

11/4/2014 - Confidentiality Agreements Dodd-Frank Employer Liability Issues FCPA Legislative Committees Non-Disclosure Agreement SEC Whistleblower Protection Policies

Arbitration vs Forum-Selection Clauses: Chicken & Egg Dilemma?

Last week the Fifth Circuit weighed in on how inartfully crafted arbitration and forum-selection clauses might trump one another. Together with recent decisions from the Second and Ninth Circuits – each with cert petitions...more

11/3/2014 - AmeriPlan Arbitration Contract Drafting Federal Arbitration Act Forum Selection Clause Goldman Sachs Petition for Writ of Certiorari SCOTUS

MSRB Proposes Gift Limitations for Municipal Advisors

The MSRB last week proposed an extension of its gift-limitations Rule G-20 to encompass municipal advisors. The Proposed Rule generally limits gifts in relation to municipal securities or advisory services to $100 per year. ...more

10/31/2014 - MSRB Municipal Advisers Municipalities

Updates on Municipal Advisor Rules

Fiduciary Standard: "A municipal advisor and any person associated with such municipal advisor shall be deemed to have a fiduciary duty to any municipal entity for whom such municipal advisor acts as a municipal...more

10/30/2014 - Fiduciary Duty Municipal Advisers Securities Fraud

SEC Approves Supervision & Compliance Rule for Municipal Advisors

The SEC last week approved new MSRB Rule G-44 implementing supervision and compliance requirements for municipal advisors. The MSRB touted the Rule as “its first dedicated rule for municipal advisors” under the Dodd-Frank...more

10/30/2014 - Compliance Dodd-Frank Enforcement Enforcement Actions MSRB Municipal Advisers Municipal Bonds Municipalities SEC Securities Litigation

Another Constitutional Challenge to SEC Administrative Forum

The drumbeats of discontent grow louder against the SEC’s more frequent use of its internal administrative forum for enforcement cases. I wrote about the current spate of Constitutional challenges to the agency’s forum in an...more

10/29/2014 - Administrative Hearings Due Process Enforcement Actions Equal Protection Herballife Insider Trading SEC

Banking & Financial Services E-Note - October 2014

In This Issue: - Obama Issues Order to Improve Data Security - Fed Official Calls for U.S. to Stop Bailing Out Banks - Global Regulators Crack Down on Shadow Banking to Curb Risks - CFPB Reports...more

10/28/2014 - Apple Apple Pay Banking Sector Banks Barack Obama CFPB Cybersecurity Executive Orders Federal Reserve Financial Institutions Shadow Banking Student Loans

FINRA Requires New “Whistleblower” Clause in Settlement Agreements

Since 2004, FINRA has required its member firms to include in settlement-agreement confidentiality clauses an exception expressly allowing a customer to respond to regulatory inquiries. See Notice to Members 04-44. FINRA...more

10/23/2014 - FINRA Settlement Whistleblower Protection Policies Whistleblowers

FINRA Addressing Market Risks: HFT, Algo’s, CARDS, CAT & Dark Pools

Carlo DiFlorio, FINRA’s Chief Risk Officer and Head of Strategy, told the annual meeting of the National Society of Compliance Professionals Monday that FINRA is emphasizing efforts to mitigate market risks, even as it...more

10/21/2014 - Alternative Trading Systems CARDS CAT Dark Pool FINRA High Frequency Trading SEC

Municipal Issuers Face Dec. 1 Deadline For MCDC Self-Reporting

State or local government entities, special tax districts, hospital districts and other municipal bond issuers face a December 1 deadline to respond to the SEC Enforcement Division’s “Municipalities Continuing Disclosure...more

10/21/2014 - Deadlines Dodd-Frank MCDC Municipal Securities Issuers Municipalities SEC Self-Disclosure Requirements

Sixth Circuit Narrows Collective-Knowledge For PSLRA Scienter

The US Sixth Circuit last week narrowed its standard for adequately pleading scienter in PSLRA cases using a collective-knowledge theory to impute knowledge to a corporate defendant from among various employees. In Omnicare,...more

10/20/2014 - Omissions Pleadings PSLRA Scienter

Banking & Financial Services E-Note - September 2014

In This Issue: - CFPB to Regulate Nonbank Institutions That Fund Auto Loans - DOJ Suggests Banks Turn In Employees to Avoid Criminal Charges - Regulators Requiring Banks to Carry Higher Capital...more

10/10/2014 - Apple Automotive Loans Banks CFPB Credit Cards Criminal Prosecution Data Breach Data Protection Dodd-Frank DOJ Foreign Banks Fraud Mobile Banking Multinationals Nonbank Firms Target

Court Rejects GOP Challenge to Adviser Pay-to-Play Regulations

On September 30, the D.C. District Court rejected two GOP state committees’ challenge to the SEC’s regulation prohibiting pay-to-play among investment advisors. Bowing to “curious” precedent in which words don’t mean what...more

10/3/2014 - Compliance Investment Adviser Pay-To-Play SEC

Sixth Circuit Rejects Private Action Under ’40 Act § 36(A)

Ruling in a case of first impression, the Sixth Circuit rejected an implied cause of action under Section 36(a) of the Investment Company Act of 1940, 15 U.S.C. § 80a-1 et seq. Although the Circuits remain split, recent...more

10/2/2014 - Breach of Duty ETFs Fiduciary Duty Investment Company Act of 1940

Forum-Selection vs. Arbitration Issue Teeing Up for Supremes

The Second Circuit stayed its mandate last week to allow public-pension litigants to file cert petitions seeking review of its August holding that a subsequent account-agreement forum-selection clause requiring federal-court...more

9/23/2014 - Arbitration Class Action Class Certification FINRA Forum Selection Clause Goldman Sachs Pensions Public Employees Stays

FINRA: 75 Years of a Sick-Chicken Survivor

FINRA celebrated its 75th Anniversary this September 18. It is the “largest independent regulator for all securities firms doing business in the United States,” with a notionally voluntary membership of over 4,100 securities...more

9/22/2014 - Broker-Dealer FINRA NASD Self-Regulatory Organizations

Banking & Financial Services E-Note - August 2014

In This Issue: - Lawmakers Urge Fed to Clarify Emergency Lending Rules - CFPB Pushing Colleges to Be More Transparent in Bank Deals - Report Finds Reversal in Trend Toward Subprime Auto Loans - CFPB Concerned...more

8/29/2014 - Automotive Loans Banks Casinos CFPB Cyber Attacks Cybersecurity Lending Money Laundering Transparency

Second Circuit Holds Subsequent Forum-Selection Clause Trumps FINRA Arbitration Requirement

The Second Circuit joined the Ninth in holding that a subsequent contractual forum-selection clause requiring federal-court litigation trumps the base requirement that FINRA member firms must arbitrate upon a customer’s...more

8/26/2014 - Arbitration Citigroup FINRA Forum Selection Clause Goldman Sachs

OCIE Announces Exam Initiative for Newly-Registered Municipal Advisors

The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced August 19 a two-year, three-phase examination initiative targeting newly-registered municipal advisors. SEC Press Rel. 2014-170 (Aug. 19, 2014). ...more

8/26/2014 - Compliance Municipal Advisers OCIE SEC

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